This review list is provided to inform you about this document in question and assist you in its preparation. Signing this agreement establishes the agreement between the parties and prevents any confusion as to the particulars of collections and payments to the parties.
1. Make multiple copies. Give one signed original to each party.
Collection Agency Agreement
Collection Agency Agreement
_____________________________, referred to as AGENCY and _____________________________, referred to as CLIENT, agree:
AGENCY represents that it is properly licensed, bonded, with a capable and trained (if required) staff of collectors, and can effect reasonable and lawful effects to collect accounts receivable of CLIENT.
CLIENT shall provide to AGENCY, from time to time, accounts receivable to collect. CLIENT represents that any accounts which it turns over to AGENCY are legally due and owed. CLIENT shall provide upon request to AGENCY source documentation for any and all accounts due, and, verification of any balance due.
AGENCY shall at all times conduct collection activity on behalf of CLIENT in compliance with all lawful regulations and laws and shall hold CLIENT harmless from any claims related to unlawful collection activity. A periodic report of the status of all collections shall be provided to CLIENT by AGENCY at least every _________________________.
AGENCY shall receive a fee of __ percent from all sums collected on behalf of CLIENT. AGENCY may deduct from sums collected its fee; however, all sums which are due to the CLIENT shall be held in a separate trust account. In the event that a debtor returns merchandise, the value for the purposes of the agreement shall be the net sales price received for the same, or if the merchandise is accepted by CLIENT, ___ its wholesale value.
CLIENT shall be entitled to, either itself or through designated agents, auditors and accountants, conduct audits of the books and records of AGENCY to verify accountings.
CLIENT shall be entitled to withdraw accounts once assigned from AGENCY, however, if any collections are made as related to such accounts shall be reported to AGENCY, and the AGENCY fee paid.
AGENCY shall be responsible for all expenses related to its collection efforts, other than court costs and attorneys’ fees, if suit is authorized, and expenditure is approved for court costs and attorney’s fees. Any suit fees or court costs shall be approved in writing prior to their expenditure.
Dated: _________________
____________________________________________________
By Client
____________________________________________________
By Agency
Collection Agency Agreement
Frequently Asked Questions
What is a collection agency agreement?
A collection agency agreement is a contract between a client and a collection agency that outlines the terms under which the agency will collect the client's accounts receivable. The agreement specifies the responsibilities of both parties, including the client's duty to provide legally owed accounts and the agency's commitment to lawful collection practices. It also covers fees, reporting, and other key terms.
What does the collection agency represent in the agreement?
The collection agency represents that it is properly licensed, bonded, and has a capable and trained staff of collectors if required. It also represents that it can effect reasonable and lawful efforts to collect the client's accounts receivable. These representations assure the client that the agency is qualified and compliant.
What are the client's responsibilities under a collection agency agreement?
The client must provide accounts receivable to the agency from time to time and represent that any accounts turned over are legally due and owed. Upon request, the client must also provide source documentation for any accounts due and verification of any balance due. These responsibilities help ensure the agency has the necessary information to pursue collection lawfully.
How does the collection agency handle legal compliance?
The agency agrees to conduct all collection activity on behalf of the client in compliance with all lawful regulations and laws. Additionally, the agency shall hold the client harmless from any claims related to unlawful collection activity. This clause protects the client from liability arising from the agency's actions.
How often should the collection agency report to the client?
The agreement requires the agency to provide a periodic report of the status of all collections to the client at least every specified period, which is left blank in the template. The parties must fill in the frequency, such as monthly or quarterly. This ensures the client stays informed about collection progress.
What is the fee structure in a collection agency agreement?
The agency receives a fee of a specified percentage from all sums collected on behalf of the client. The exact percentage is left blank in the template and must be agreed upon by the parties. The agency may deduct its fee from the sums collected.
Can the collection agency deduct its fee from collected sums?
Yes, the agreement explicitly states that the agency may deduct its fee from sums collected. However, all sums due to the client must be held in a separate account or handled as specified in the agreement. This ensures proper accounting and distribution of funds.
What happens to the money collected by the agency?
The agency may deduct its fee from the sums collected, and all sums due to the client shall be held in a manner specified in the agreement, though the template cuts off after 'held in a'. The agreement likely requires the agency to hold client funds in trust or a separate account. The client should ensure this section is completed to protect their funds.
What documentation must the client provide to the collection agency?
Upon request, the client must provide source documentation for any and all accounts due, as well as verification of any balance due. This documentation supports the agency's collection efforts and helps ensure compliance with legal requirements. The client's cooperation is essential for effective collection.
What is the purpose of the hold harmless clause in a collection agency agreement?
The hold harmless clause requires the agency to protect the client from any claims related to unlawful collection activity. This means if the agency engages in unlawful practices, it must indemnify the client against resulting claims. It shifts the risk of non-compliant collection actions to the agency.
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